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Schlumberger Limited (SLB - Analyst Report) was among the first U.S. oil companies to announce that its quarterly earnings would be hurt due to sanctions imposed by the United States and European Union (EU).

Owing to Russia’s support to rebels in Ukraine, the U.S. has imposed sanctions on Rosneft and Novatek, Russia’s second-largest gas producer. BP plc (BP - Analyst Report), the largest foreign investor in Russia with a stake of about 20% in Rosneft – Russia’s largest oil producer – cautioned last month that the sanctions could adversely affect its business.

Schlumberger too expects its third-quarter profit to be hurt by about 3 cents per share. According to Thomson Reuters, analysts project earnings of $1.51 per share for the quarter ending Sep 2014.

Schlumberger, which drills on the island of Sakhalin with Rosneft, generates about 4–5% of its revenues from Russia, amounting to about $2.2 billion in annual revenue, as per Simmons & Co.

However, the leading oilfield provider services said that though the sanctions were confining the engagement of people and equipment, it would be able to cater to clients in the country without major obstacles.

It was in Jul 2014 when the company announced that the sanctions were unlikely to impact its business. However, further sanctions have been announced by the EU and U.S. since then, on Russia's energy, banking and defense sectors.

Schlumberger, along with Gazprom Neft, the oil-producing arm of Russian state gas company Gazprom, is working on technology for the Bazhenov shale development project in Western Siberia.

Notably, there are no sanctions on Gazprom. Prior to the sanctions, Russia was an emerging market for the oil service industry. Oil majors such as ExxonMobil Corporation (XOM - Analyst Report) were planning to start drilling wells in the Russian Arctic. However, it is a different scenario now.

Schlumberger currently has a Zacks Rank #3 (Hold). A better-ranked stock in the oil and gas sector like Sunoco Logistics Partners L.P (SXL - Analyst Report), sporting a Zacks Rank #1 (Strong Buy), is expected to perform better.

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